You know, I think I need to do something very, very special for our tax accountant. Not only does she always receive me with patience, humor and a surprising lack of physical violence (if you know how messed up our taxes have been this past year, you’d understand that last statement), but she also has enough experience to know what you can and cannot try with the IRS.
As some of you will recall, we bit the bullet back in Sept/Oct, and turned in two years’ worth of both business and personal returns. Our 2010 return cost us money, and our 2011 return gave us a refund (sadly, the cost was 10x larger than the refund). At the time we filed our returns, she warned us that we were probably looking at penalties, and that we’d start to get nasty-grams from the IRS about them. Just collect them and bring them to her and she’d help us go through them and come up with a plan.
So we filed our returns on Oct 1st, and sure enough, all through November we’ve been getting various penalty letters from the IRS. I was mentally prepared for the need to pay them, but not for the amount. HOLY MOLY!!!!! Our total taxes due were in the $5500 realm, but our penalties were almost as high for being 1.5 years late with one return, and 6 months late with the other. Apparently, the IRS files not only flat fees, but also months passed since going late. Yowza.
But here’s where our accountant is made of pure gold. When I brought in all those letters to her, she said “OK, I don’t want to get nosy, but do you have a legitimate reason why you went late on these returns? Was there some major upheaval in life that knocked you off-track? Medical issues? Marriage breakup? Family issues? Something that can be substantiated with doctor’s records or therapy records or the like? Because if there is, we can file to waive all these fees…..”
Now, without getting too far into it, suffice to say that the tail end of 2010 and all of 2011 were hell months for us; we had medical issues, family issues, marital issues, just about every issue you can have tossed at us over that 18 month period. I had never been late on IRS filings before, so we didn’t have a long track record of delinquency in that regard. But we were knocked so hard in 2010 and 2011 that yea, I could show we had legitimate reasons (plural) for not filing.
Apparently, the IRS does have a heart tucked away under all that bureaucracy (sorta). If folks have never gone late on taxes, then go late for some verifiable reason (medical, family emergency, etc), they can file to wave the late fees. And in many (if not most) cases, if there is not a history of delinquency, the IRS will waive those fees.
So, we’re moving ahead now with filling to waive all those fees, which will cut our tax burden back down from $8K+ back into the realm of $5500. Fingers crossed that the fees are in fact waived. For folks who have held off filing returns because of concerns about the fees, consider that you might be able to get them waived. Worth a try anyway.